Hydroxyurea (HU), a drug effective in the treatment of sickle cell disease, is thought to indirectly promote fetal hemoglobin (Hb F) production by perturbing the maturation of erythroid precursors. The molecular mechanisms involved in HU-mediated regulation of gamma-globin expression currently remain unclear. We identified a HU induced small GTP-binding protein, secretion-associated and ras-related (SAR) in adult erythroid cells by differential display. Stable SAR expression in K562 cells resulted in macrocytosis and immature cells appearance associated with increased gamma-globin mRNA. SAR-mediated induction of the gamma-globin gene also inhibited K562 cell growth including arrest in G1/S phase, apoptosis and delay of maturation, cellular changes consistent with the previously known effects of HU on erythroid cells. Similarly, SAR also enhanced both gamma-and beta-globin transcription in bone marrow primary CD34+ cells, but its effects on gamma-globin induction is more profound than that on beta-globin. Though upregulation of GATA-2 and p21 were observed both in SAR-expressing cells and HU-treated K562 cells, the PI3 kinase and phosphorylated ERK were inhibited specifically in SAR-expressing cells. These data reveal a novel role of SAR distinct from its previously known protein trafficking function. We suggest that SAR may participate in both erythroid cell growth and gamma-globin production by regulating PI3-kinase/ERK and GATA-2/p21 dependent signal transduction pathways. Further elucidation of the involved pathways utilizing siRNA and specific protein trafficking inhibitors, as well as an analysis of the function of retroviral delivered SAR into primary hematopoietic cell are currently underway. Deletion and mutation studies of the SAR promoter have also been initiated to define potential HU-response site(s).